study guide

Chapter 12—Making Alliances and Acquisitions Work

TRUE/FALSE

1. Equity-based alliances include co-marketing, research and development, contracts, turnkey products, strategic suppliers, strategic distributors, and licensing/franchising.

ANS: F PTS: 1 DIF: Easy REF: p. 389
OBJ: 12.1 NAT: AACSB: Tier 1 Analytic; Tier 2 Creation of Value

2. A joint venture (JV) is a form of equity-based alliance.

ANS: T PTS: 1 DIF: Moderate REF: p. 389
OBJ: 12.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy

3. A licensing is a form of equity-based alliance.

ANS: F PTS: 1 DIF: Moderate REF: p. 389
OBJ: 12.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy

4. Strategic investments in an equity-based alliance involve one partner investing in another, while cross-shareholding involves both partners investing in each other.

ANS: T PTS: 1 DIF: Easy REF: p. 389
OBJ: 12.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy

5. Acquisitions are more common than mergers.

ANS: T PTS: 1 DIF: Easy REF: p. 389
OBJ: 12.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy

6. Many firms establish alliances with competitors.

ANS: T PTS: 1 DIF: Easy REF: p. 390
OBJ: 12.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy

7. Since integration within alliances is usually not as tight as acquisitions, antitrust authorities have a higher likelihood of approving alliances.

ANS: T PTS: 1 DIF: Moderate REF: p. 391
OBJ: 12.1 NAT: AACSB: Tier 1 Analytic; Tier 2 Legal Responsibilities

8. Formal government policies regarding entry mode requirements for new firms are generally becoming more conservative.

ANS: F PTS: 1 DIF: Moderate REF: p. 391
OBJ: 12.1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Legal Responsibilities

9. Overall, alliances have emerged as great instruments of real options because of their flexibility to sequentially scale up or scale down the investment.

ANS: T PTS: 1 DIF: Moderate REF: p.